Wyckoff Accounting

U.S. Citizens and Residents Living Abroad - Did You Know?

Generally, U.S. citizens and resident aliens must pay federal tax on their worldwide income, including income received while living outside the country. Even those who qualify to exclude foreign earned income for tax purposes, or to claim a credit for taxes paid to other countries to offset their U.S. tax liability, generally must still file a federal tax return.

People living abroad typically qualify for an automatic two-month extension to file, meaning that they may file their 2023 federal tax returns anytime through June 17, 2024. However, this extension applies only to filing, NOT to taxes owed. The IRS will generally add interest charges to any tax amounts not paid by the standard April filing deadline.

Remember also that if you own or control financial accounts based outside the U.S., you may need to report not only the income from those accounts, but also the account balances on your tax return. You may also have to file a special Foreign Bank Accounts Report (FBAR) form. You cannot include the FBAR with your tax return, as it must be filed with a different treasury department than the IRS. A tax professional can help you file your tax return and all other required reporting forms by the appropriate deadlines electronically, to ensure rapid processing.

Filing Extensions and Minimizing Penalties – Did You Know?

Taxpayers who request an extension to file their 2023 federal income tax returns have until October 15th, 2024. However, an IRS extension is only an extension to file tax returns, NOT an extension to pay any tax owed. Taxes not paid by the April 15th payment deadline may be subject to late penalties and interest charges.

Electronic payments may be made using the IRS online payment portal (link below). The IRS urges those who cannot pay what they owe at this time to pay whatever amount they can, and then apply for an installment plan to pay off the remaining balance.

If you are required to file, you should still file your taxes, even if you can't pay, as the failure-to-file penalty may be 10 times more than the failure-to-pay penalty.

IRS Online Payment Portal: https://www.irs.gov/payments